Market Heading to 17000 in Sept Series ? Weekly Market Analysis : Aug 30 2021

 

• Weekly hammer candle on Nifty making another all time high where it bounced nearly 1.3%  from the previous week fall trending upside.

• Nearly 2.5% recovery )from previous week fall  in Bank Nifty (later retraced to give up 0.85% of it) forming a small body candle at unchartered area.

• Latest nifty daily candle is also a green hammer candle pattern while bank nifty latest candle is a small body candle at a resistance zone.

• Nifty has the volatility expansion  while Bank nifty has the Bollinger band volatility  had expanded slightly previous weeks.

• Nifty made another all time high level hitting  16722 and this zone seems like a resistance since it was hit few times now while bank nifty still dealing resistance with resistance with retaining 36000 level for few days being a pending task.

• The nifty resistance continue to be 16700 and 16850 and 17000 while previous new support levels at 16350-16450 and 16000-16150  levels and below that swing low levels of  15850-15950 & 15500 - 15650 could  also act as  support zone.

• Bank nifty has  resistance near 35600-36000 and then at 36500/37700 and below supports are at 35300-35450,34900-34400 and 34000-33700.

• Nifty maintains the RSI momentum at bullish zones on all timeframes.Bank nifty continue sideways momentum on both daily and monthly timeframes.

• Nifty has bearish momentum divergences seen on weekly and daily and therefore need be cautious of a correction.

• Nifty ADX trend indicator trend is bullish and rising and with strength  also rising  up on daily and  maintain  the trend bullishness on weekly and monthly timeframes.

• Bank nifty ADX trend indicator crossed over bull zones last week and maintains it on daily and weekly bit  not rising strength  while monthly maintain the bullish trend with strength rising.

• Open interest data for Nifty & Bank nifty showing a short covering  based on the futures contracts.

• Highest options call writing for Sept 02 expiry is seen at 16700 with 17000 also seen having more writing while 16600  levels shows highest support point for nifty with 16500 support is close by.

• Bank-nifty options open interest data shows highest call writing at 36000 and 36500 levels while highest put writing also seen at 35000 and 35000  levels that could act as support for the expiry

• Put call ratio for nifty accordingly is seen 1.21 which is bullish while 0.91  for bank-nifty is  also near  bullish.

• India VIX  dipped  nearly 5%  and settle at 13.4  from the previous weeks 8% spike

• The Nifty IV 11.7 is above HIV 7.8  and  IVP remaining 3.1  levels which is at the low volatility regime. 

• IT sector index once again moved up ~3% last week and the bearish divergence seen weekly can not be negated yet.Therefore need slightly caution even though it is bullish.Dollar strength and work from home model could be behind this vertical bullishness.

• FMCG after the 4.5%  breakout last week this week sector index formed a dragonfly indecisive doji moving up less than 1%  last week. there is a momentum bearish divergence on daily but expectation is that the up move in this defensive sector is likely to continue.

• Metal The bullish reverse divergence of momentum seems to be working when it took a bounce from  momentum support zone on weekly  and daily momentum is expected to catch up and stock could be  picked as it take support at rsi 40 or above gets into bull zones.

• Auto sector  further fall nearly 2% last week bearish and continue moving down toward double top neckline on weekly and is clear bearish momentum on short term.

• Pharma sector  previously  has earlier  fallen into bearishness previous  weeks  but this week it has a hammer on weekly and wide range green candle framed due to bullish momentum divergence seen on daily and could be that it could move up again.

• Last week FII sold > 6830 cr in cash.

• DII bought 6380  cr last week

• The net longs on derivatives of FII/DII stayed flat last week.

• US markets  rose up and closed green weekly on all major indices. Fed chair announcement on taper /interest weekend could have impacts on our market.All us markets are seen green as of now following indication of taper begin 2021 and no rush to hike rates.

• Dollar Index fallen nearly 1% last week after a false break out at resistance on weekly W pattern.

• Crude Oil once again bounce up 10%  above 71 after it has fallen  than 8% from top to settled near  64.4 previous week 

• USD-INR currency pair fall from support zone to close 73.4 levels and could have impact on IT rally next week.

• Gold closed green for 3 week after the previous recovery hammer bouncing from the major support zone could continue bullishness heading to the channel top but with slow momentum.

• India VIX continue at  low 13.4 levels and any spike could benefit vega positive strategies on options like double calendar.

• Therefore Index calendar spreads hedged is always bad idea for coming week due to v shape moves often.

• To wrap-up Markets made another all time high level last week recovering from the previous week vertically fall showing the bulls are here to  stay for long.

• Overall bias is  slightly bullish but the  momentum bearish divergence and FII selling and bank nifty not taking away resistances are cause of concern to be cautious.

• Given that bank nifty also has not given up on price trend at least and the nifty  momentum bullishness ,and trend and support levels downside still indicate it still could move at least till 17000 in September 21 but may not be next week.

• India vix fall slightly to 13.4  levels and Lower IV and Vix spikes continue difficult for non directional option traders. intraday spike that occur and V shapes are frequent making intraday trading also not easy.

• Positional long trades could remain long till the support levels as indicated earlier are taken away.